Time Warner Cable Extends Discovery Deal - Analyst Blog

By: Zacks.com

Posted: 11/19/2013 1:06:00 PM

Referenced Stocks: CBS;CMCSA;DISCA;TWC

Yesterday,
Time Warner Cable Inc.
(
TWC
), the second largest cable MSO (multi-service operator) in the
U.S., announced that the company has renewed its distribution
agreement with
Discovery Communications Inc.
(
DISCA
). Per the agreement, subscribers of Time Warner Cable will be
able to watch the entire network of Discovery Channels without
interruption.

The multi-platform agreement will let subscribers watch live
as well as video-on-demand Discovery programs. In the future,
Time Warner Cable intends to negotiate with Discovery to offer
its network to the TVEverywhere subscribers with an authenticated
log-in facility. As a result, viewers will be able to watch
Discovery contents even when they are out of home.

For Discovery, this deal will help the company to increase its
U.S. Distribution revenues. On the other hand, we believe
renewal of Discovery network is a huge relief for Time Warner
Cable. In Aug 2013, the company faced a month long blackout of
CBS network over programming contract renewal disputes with
CBS Corp.
(
CBS
). In the third quarter of 2013, Time Warner Cable lost a
whopping 306,000 residential pay-TV subscribers primarily due to
CBS network blackout.

Comcast Corp.
(
CMCSA
), the largest cable MSO in the U.S., also lost 129,000 video
subscribers in the same quarter. In a recently published report,
Leichtman Research Group stated that the top nine U.S. cable TV
operators had a net loss of 600,643 pay-TV customers in the said
quarter. This was cable TV industry's biggest net loss after the
third quarter of 2010. Both Time Warner Cable and Discovery
currently have a Zacks Rank #3 (Hold).